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The Pensions Bill 2007 underwent some amendments in the House of Lords which had a sting in the tail for protected rights.

A new clause was inserted into the Bill which said that protected rights and pensions built up from other savings will still be treated differently.

Those who are married or in a civil partnership will still be required to buy a 50 per cent spouse or partner pension with their protected rights pot, even after money purchase contracting-out is abolished in 2012.

The clause is inconvenient to say the least and means that consumers cannot combine their pension pots to buy one annuity and will therefore incur two annuity administration expenses potentially leading to an overall lower annuity rate.

Former DWP minister Baroness Hollis attempted to add an amendment to the Bill which would have removed means-testing for low earners.

But the Lords in their infinite, and sometimes inexplicable, wisdom decided not to pass the amendment which could be another blow for certain individuals entering the scheme.

On Thursday last week, the breaking news was the Government’s embarrassing defeat by 55 votes when the House of Lords backed proposals for a lifeboat fund to top up compensation awarded to the 125,000 pensioners whose savings were lost from 1997 to 2005.

Pensions consultant Ros Altmann welcomed the vote and hoped that it would mean victims were more likely to be eligible for the same 90 per cent minimum protection as those eligible for the PPF.

But the decision now rests with the House of Commons where the Bill returns for its third reading, and the Government majority is likely to have its way.

The Thornton Review was published last week which proposed the Financial Ombudsman Service be combined with the Pensions Ombudsman – a finding which was welcomed by Pensions minister James Purnell.

But the ABI were not so happy and director general Stephen Haddrill warned against a combination of the two ombudsman saying the two have “distinct remits and significant differences in their approach”.

Today’s big news is the DWP’s response to feedback from the consultation on the personal accounts White Paper.

The contribution cap will be reduced from £5,000 to £3,600 which will please providers as their argument was that if the cap was £5,000, personal accounts would undermine existing pensions provision.

The DWP has also announced that it will review the £10,000 year one contribution level.

Other details which have emerged suggest there will be no tax payer subsidisation of personal accounts, although short term costs such as policy development and legislation will be borne by the tax payer.

The DWP also says it remains committed to finding a pragmatic solution for group personal pensions to make it as light touch as possible for employers to pass the good scheme test.

And finally, earlier this week the Pensions Policy Institute and the Equal Opportunities Commission set out a series of proposed reforms to the trivial commutation limit on personal accounts in a bid to improve the rate of return for low earners and other groups.

Scottish Widows backed the first reform proposed which was to increase the trivial commutation from its current £16,000 to £30,000 and increase the capital disregard from its current level of £6,000 to £10,000.

Pensions Minister James Purnell said there were no easy solutions and that there will always be a trade-off in these situations but that he and the DWP would consider the reforms put forward.

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18th December 201812:39 pm

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